The bank slumped as much as 4 percent in Paris trading
after reporting net income of 252 million euros ($326 million),
less than the 482 million-euro average estimate of five analysts
surveyed by Bloomberg.

Credit Agricole booked 940 million euros of net losses
related to Emporiki Bank of Greece SA, the Athens-based unit it
acquired in 2006, and Greek bond writedowns resulting from the
nation’s sovereign debt restructuring. The French bank is
struggling to staunch losses from Greece after reporting its
first annual loss last year.

“Credit Agricole keeps suffering because of Greece,”
Valerie Cazaban, who helps manage 80 million euros at Stratege
Finance in Paris and has shares in the bank, said in an
interview before the earnings were released. In Greece, the
French bank “can’t lock out its positions, it is extremely
difficult.”

The losses in Greece were partly offset by a 466 million-euro gain after Credit Agricole repurchased its own debt.

Refinancing, LTRO

Chief Executive Officer Jean-Paul Chifflet repeated today
that his bank will continue to cut exposure to refinancing the
Greek unit as it keeps increasing deposits in the country and
loans decline. Credit Agricole’s net refinancing exposure to
Emporiki was 4.6 billion euros at the end of March, compared
with 5.5 billion euros in December, partly as deposits rose.

Credit Agricole also started talks with Greek authorities
to access Greece’s Emergency Liquidity Assistance funds,
Chifflet said. “For the moment, the door is closed to us,” the
CEO said.

Credit Agricole, which by the end of April had achieved 74
percent of its 2012 funding needs, has no plans to use “early
reimbursement windows” for the three-year loans the European
Central Bank has provided to lenders since December, Chief
Financial Officer Bernard Delpit told journalists. Credit
Agricole reduced ECB financing to Emporiki to 1.2 billion euros
from 1.8 billion euros at the end of March because of so-called
haircuts on collaterals, Chifflet said.

Greek Losses

The losses from Greece in the first quarter included 130
million euros in writedowns on Emporiki’s deferred-tax assets
and 319 million euros in provisions on debt from three Greek
companies as part of the country’s sovereign-debt restructuring.

Credit Agricole last year reduced its Greek staff by 11
percent to 5,100, booking 51 million euros in costs. The lender,
which spent about 2.2 billion euros in 2006 to amass a
controlling stake in the Athens bank, last year wrote down 359
million euros of remaining goodwill at the unit.

In January, Credit Agricole Group injected about 2 billion
euros to reinforce Emporiki’s capital. Chifflet, who took over
in 2010, last year started trimming the bank’s balance sheet and
Credit Agricole in December scrapped its 2014 earnings targets.

Chifflet reiterated Credit Agricole Group’s target for a
common equity Tier 1 ratio of 10 percent by the end of 2010.
Credit Agricole sees no need of a capital increase related to
its Greek exposures, the CEO said.

Euro Exit Risk

Greece’s political leaders are in a fifth day of talks to
form a government, with Evangelos Venizelos, the Greek socialist
Pasok leader and former finance minister, pressing counterparts
on a proposal for a unity administration that would avert a new
election amid rising concern the nation will exit the euro.

“The election results increased the complexity of a
situation that was already tense,” Chifflet said on a call with
journalists. “We have been working for several quarters on this
worry” that Greece will leave the common currency, Chifflet
said, adding that a euro exit is not the main scenario.

French banks have been embroiled in Europe’s debt crisis as
they held $620 billion in private and public debt in Greece,
Portugal, Ireland, Italy and Spain at the end of December, the
world’s largest such holdings by foreign lenders, according to
the Bank for International Settlements.

Credit Agricole, like BNP Paribas and Societe Generale, is
cutting investment-banking jobs and assets as the crisis curbs
access to funding in dollars and regulators impose stricter
capital rules. Credit Agricole reduced its funding needs by 35
billion euros in the nine months through the end of March out of
a target of 50 billion euros by the end of 2012, it said.

Consumer Banking

Most of the bank’s balance-sheet reductions come from its
corporate- and investment-banking unit. The division, which is
shedding 1,750 jobs and closing operations in 21 nations, aims
for “medium-term” annual revenue of 5.4 billion euros, up from
4.73 billion euros in 2011, the bank said in April.

First-quarter profit at the unit was 156 million euros,
hurt by 246 million euros of net costs related to its balance-sheet trimming plans, Credit Agricole said. Revenue from
continuing capital-market and investment-banking operations fell
2.6 percent to 899 million euros, the bank said.

Earnings from the regional banks’ French consumer network
were 372 million euros, compared with 374 million euros a year
earlier. The LCL French consumer-banking network had 204 million
euros of profit, up from 195 million euros a year earlier.

Earnings at the asset-management, insurance and private-banking division rose 22 percent to 116 million euros, helped by
inflows at fund-management division Amundi.